Case Summary (G.R. No. L-17870)
Factual Background
LGDI insured its raw materials, inventory, equipment and leased warehouses under an open fire policy. After a February 19, 2008 blaze destroyed several buildings, LGDI claimed indemnity. Respondents’ independent adjusters deemed LGDI’s supporting documents insufficient, leading to claim denial for alleged policy violations (Conditions 13, 19), misdeclaration of machinery, and lack of independent evidence.
Trial Court Proceedings
LGDI filed a Complaint for Specific Performance and Damages in Makati RTC Branch 147. At pre-trial, both parties identified and pre-marked voluminous exhibits and reserved the right to introduce additional documents during trial. Trial commenced on November 7, 2013, with witnesses including Gina Servita and Luis Raymond Villafuerte. Servita reconstituted commercial documents months after the fire; Villafuerte admitted reduced involvement in LGDI and limited knowledge of the Questioned Documents.
Respondents’ Motions and RTC Orders
On July 10, 2014, LGDI submitted Mrs. Villafuerte’s 2nd Supplemental Judicial Affidavit. PNB Gen moved to expunge it (citing the Judicial Affidavit Rule and Pre-Trial Guidelines); UCPB adopted the motion. On September 18, 2014, the RTC overruled objections and allowed LGDI to examine Villafuerte on the Questioned Documents, without prejudice to the expunge motions. On October 1 and November 26, 2014, the RTC denied both motions, relying on the parties’ pre-trial reservations and the court’s discretionary power to admit evidence.
Court of Appeals Decisions
December 21, 2015 – The CA dismissed respondents’ certiorari petitions and affirmed the RTC orders, holding that (a) Section 7, Rule 132 authorized re-direct examination on matters raised in cross-examination and (b) the Pre-Trial Order reservations warranted admission of additional documents and the supplemental affidavit.
March 6, 2017 – On respondents’ motions for reconsideration, a Special Former Fifth Division reversed itself, ruling that the Judicial Affidavit Rule (Sections 2 and 10) and Pre-Trial Guidelines precluded belated submission and that Villafuerte lacked personal knowledge to authenticate the documents.
Issue
Whether the CA erred in disallowing the introduction of additional documentary exhibits during trial and in annulling the RTC’s admission of the 2nd Supplemental Judicial Affidavit of Mrs. Villafuerte.
Supreme Court Ruling
The Supreme Court granted LGDI’s Rule 45 petition, reinstating the CA’s December 21, 2015 Decision. It held that:
• The Judicial Affidavit Rule and Pre-Trial Guidelines do not absolutely bar additional evidence once trial has begun. Section 2 of the JA Rule mandates timely submission but allows one belated submission for valid reasons without undue prejudice (Sec. 10).
• The Guidelines on Pre-Trial permit the trial court, in its discreti
Case Syllabus (G.R. No. L-17870)
Nature of the Case
- Petition for review under Rule 45 seeking reversal and setting aside of the March 6, 2017 Amended Decision of the Court of Appeals (CA), Special Former Fifth Division.
- CA Amended Decision had granted respondents’ motions for reconsideration of the CA’s December 21, 2015 Decision, which had annulled the RTC’s Omnibus Orders of October 1 and November 26, 2014 in Civil Case No. 11-238.
- Core dispute: whether the trial court gravely abused its discretion in allowing additional documentary exhibits and admitting a second supplemental judicial affidavit during trial.
Factual Background
- Lara’s Gift and Decors, Inc. (LGDI) manufactures, sells, and exports handicraft items and decorative products.
- LGDI leased multiple buildings/warehouses (R1, R2, R3, R4, Y2, Y3, Y4, Y4 Annex) in Taguig City for production and storage.
- Insured goods—handicraft products, raw materials, machinery and equipment—against fire and allied risks for P582,000,000 under an open policy effective February 19, 2007 to February 18, 2008.
- PNB General Insurers Co., Inc. (PNB Gen) covered 55% of the sum insured under Policy No. FI-NIL-HO-0018666; UCPB General Insurance Co., Inc. covered the remaining 45% under Policy No. HOF07D-FLS072788.
- Policy limit later increased to P717,000,000 by endorsement.
Fire Incident and Initial Claim
- On February 19, 2008, about four hours before policy expiration, fire razed Buildings Y2, Y3, and Y4.
- LGDI promptly filed claim for losses and damages.
- Respondents engaged Cunningham Lindsey Phils., Inc. (CLPI) to adjust; LGDI failed to submit required supporting documents.
- Respondents then appointed Esteban Adjusters and Valuers, Inc. (ESTEBAN), which also found LGDI’s documentation insufficient.
- Respondents denied coverage citing:
• Violation of Policy Conditions Nos. 13 and 19
• Misdeclaration/exclusion of laser machines from the machinery and equipment claim
• Absence of independent and competent evidence to substantiate loss
Complaint and Relief Sought in RTC
- LGDI filed Complaint for Specific Performance and Damages (Civil Case No. 11-238) in Makati RTC, Branch 62.
- Alleged entitlement to insurance proceeds under the policy.
- RTC’s Notice of Pre-Trial directed parties to exchange pre-trial briefs and exhibits at least three days before pre-trial, warning that no other evidence-in-chief would be admitted without good cause.
Pre-Trial Conference and Order
- Six meetings devoted solely to identification and marking of voluminous documentary exhibits.
- RTC issued Pre-Trial Order on September 12, 2013, allowing five days to correct errors and permitting reservation for additional documentary exhibits during trial.
- Parties filed motions to amend/correct the Pre-Trial Order but none sought to admit additional judicial affidavits or exhibits beyond pre-trial.
Trial on the Merits
- Trial commenced November 7,